Two-stage network structure with undesirable outputs approach

Abstract

Articles in which nonparametric data envelopment analysis (DEA) is applied to estimate the efficiency based on a network structure usually consider the desirable intermediary parts that are the first stage’s outputs to be used as the second stage’s inputs. In many real-life situations, the intermediary parameters include desirable and undesirable outputs. This issue has drawn much attention from DEA researchers in recent years. The main motivation for this application is weak disposability for modeling the networks with undesirable intermediary parts. Undesirable outputs have been investigated in this study in two forms, i.e., the final outputs or intermediary parameters. In both cases, the non-cooperative game theory is offered for evaluating the relative efficiency of the executive units. In 2008, a real case was explicated for 39 airports in Spain in applied analysis of the proposed approaches.